Chancellor George Osborne had little in his red box to boost would-be homeowners or landlords, and nothing concrete to support his ‘we are the builders’ boast when it comes to delivering the hundreds of thousands of new homes needed to meet demand and offer those trapped in Generation Rent hope of escape. He confirmed as expected that the 3% stamp duty surcharge on all second home purchases will come into effect as anticipated from 1st April, but without a proposed exemption for purchases of 15 homes or more, which may deter swathes of buy-to-let investors.
The Chancellor did announce a new Lifetime ISA aimed at boosting savers under the age of 40, with a Government top up of £1 for every £4 saved. This could be used to boost a pension pot or help fund a property purchase. The limit on a standard ISA was also raised from £15,000 to £20,000, though Capital Gains Tax payable on residential property remained the same despite being cut for virtually all other asset classes. Elsewhere there were expected increases in income tax thresholds, a reduction in business rates for smaller firms and a reform of stamp duty on commercial property.
Nick Barnes, Head of Research at Chestertons, a London lettings and estate agent, said: “With the confirmation that the 3% surcharge on second homes and buy-to-let properties is set to come into force from 1st April, we now wait to see whether smaller landlords and would-be investors will find their business models squeezed still further. Larger investors who may have been hopeful of an exemption may also now be discouraged, and altogether this could be very bad news for renters, who quite simply will have fewer homes to choose from if the big landlord sell-off comes to pass.”
Barnes continued: “The Chancellor also seems oblivious to the fact that his last major reform to stamp duty, in December 2014, meant receipts in 2015 were £662million lower than in 2014 – admittedly around £157m of this was due to Scotland receiving their own receipts from April 2015 rather than going to Westminster, but the loss to the Treasury was a little over £505m, which is still a substantial amount for a Chancellor trying to balance the books.”
Cory Askew, Executive Director at Chestertons, added: “Infrastructure investment, including the announcement that Crossrail 2 will definitely go ahead, will have been welcome news to many London homeowners – whenever new transport projects start moving, so do property prices – but the ‘we are the builders’ line favoured by Mr Osborne is beginning to ring hollow when it comes to delivering on housing. UK house-builders may welcome a clamp-down on international developers funnelling profits abroad, but if that ultimately means overseas investment into the UK dries up and fewer new homes are built, then first-time buyers and hard-pressed renters will be the real losers.”
Askew concluded: “We would have liked to see more emphasis being placed on bringing more land forward for development and lifting barriers on house-building in terms of easing red-tape and planning laws and boosting access to finance to allow new entrants into the market – addressing the chronic shortage of homes available for would-be home-owners to buy is the only way to really boost the affordability of home-ownership and keep rents rises to a minimum in the long-term.”